Pub. 12 2017-2018 Issue 4

WWW.NEBANKERS.ORG 22 absolutely nothing on its website about the “appraisal and accounting irregu- larities affecting a segment of the Association’s lending portfolio” that triggered the withdrawal of its financial statements and call reports, nor has it posted any other information about this accounting fiasco. While visitors to the site will learn about the 2017 Lone Star Ag Credit Dove Hunt Invitational and the Annual Appreciation Event for Corsicana Stockholders, there is no listing of the association’s current management or of recent management changes, if any, as well as corrective actions being taken to fix Lone Star’s accounting problems. As cooperatives, FCS associations should be fully transparent to their member/ borrowers—that is definitely not the case today at Lone Star. Will FCSA& Frontier FarmCredit Ever Merge? In the October 2014 FCW, I wrote about a “strategic alliance” that Frontier Farm Credit, which serves the eastern third of Kansas, entered into with Farm Credit Services of America (FCSA), the largest FCS association, which serves Nebraska, Wyoming, South Dakota, and Iowa. At June 30, 2017, FCSA had assets of $26.9 billion while Frontier had assets of $2 billion. To the best of my knowledge, there are no other strategic alliances in the FCS universe. According to a letter FCSA sent to itsmember/borrowers when the “strategic alliance” was formed, the two associations “will be jointlymanaged under a single team of [FCSA] leaders.” The question then was why didn’t Frontier simply merge with FCSA? That question still resonates today as the FCSA management team runs Frontier even though Frontier has its own board of directors. Presumably the FCSA managers in Kansas take their march- ing orders from Frontier’s directors, even if those directors have adopted policies that differ from policies adopted by FCSA’s directors. Although there is a coordinating committee comprised of directors from both associations, it is puzzling how one management team can be responsible to two independent boards of directors, especially given the degree of operational integration of the To contact Bert Ely, email bert@ely-co.com , phone (703) 836-4101, or send mail to P.O. Box 320700, Alexandria, Va. 22320. Reform Farm Credit: Help educate the public, the press, and policymakers. Get the facts, take a stand at http://reformfarmcredit.org . If your bank belongs to the American Bankers Association (ABA), you can enjoy a free email subscription to Farm Credit Watch or you can read it monthly online at www.aba. com. To receive Farm Credit Watch by email or to manage your subscription, visit ABA Member Email Bulletins at www.aba.com/ Tools/Ebulletins/Pages/default.aspx. For other inquiries, please contact Barbara McCoy at the ABA at (800) BANKERS or bmccoy@aba.com . 800-288-5489 www.ccbcm.com Fully registered Dealer Bank • Not FDIC Insured • No Bank Guarantee • May Lose Value { 1985 Since FROM ONE COMMUNITY BANK TO ANOTHER. We have delivered fixed income strategies and support to banks of all sizes since 1985. Operating in over 30 states, the Capital Markets Group is always ready to meet the needs of our fellowcommunity bankers.We keep investing simple so that banks can focus on what really matters— lending to the communities who support us. • Portfolio Strategy, Sales and Service • Bond and Securities Underwriting/Trading • BancPath® and FlexLoan® via Asset Management Group We speak the same language. Bert Ely — continued from page 20 two associations. The arbitrary manner in which income and expenses are di- vided between the two associations, as summarized in their respective annual reports, reinforces the key question: Why haven’t Frontier and FCSAmerged? Rea- sons not to merge are not at all evident, which raises this question: What is the real reason they have not merged? As is the case in the Lone Star Ag Credit situa- tion, the lack of transparency here is very troubling, and should be especially so for Frontier’s member/borrowers since Frontier is very much the junior partner in this alliance. Worse for Frontier’s member/borrowers, they are stuck in the alliance because Frontier no longer has its own management team. 